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Planning and Guidance

Retirement planning

Saving towards retirement requires discipline and proper planning.

The sooner you realise that retirement is not far away and you start planning accordingly, the likelier you are to reach your pension goals. The most important factors to consider are how much you will be spending during retirement and how long your savings need to last.

Typically, people spend less when they retire than they do when they’re working. This happens because your living costs decrease. You won’t be commuting to work, for example, so you’ll be saving on car maintenance and fuel, and you’ll probably have paid off your mortgage by then or even downsized to a smaller, more economical home. However, other costs, such as healthcare and leisure expenses, will probably go up.

How much money you need really depends on your lifestyle, but studies have shown that a pension income of 70%-80% of your last salary should provide a comfortable standard of living for your retirement years. In practical terms, if your last monthly salary was €2,000, your monthly retirement income should be at least €1,400.

The amount you need to save to live comfortably during retirement depends on the age you are planning to retire. Delaying retirement will let your savings grow longer and the money you save won’t need to last you as long.

If you choose to retire early, on the other hand, your savings won’t have as much time to grow and the money you set aside will need to last you longer. In Cyprus, the average retirement age is 65 with a life expectancy of around 83 years. This means the average Cypriot should plan for approximately 18 years of retirement.

If you’re still finding it difficult to get an idea of how much you need to retire comfortably, here are a couple of commonly used guidelines that can help you out.


If you start saving 15% of your income from the age of 25, you should have enough to maintain your standard of living during retirement. With the 15 Percent Method, you don’t need to worry about setting any retirement goals. Just save and invest 15% of your income over a span of 40 years and let it grow until you retire.

If you begin saving later in life, you’ll have to save more of your income to achieve the same results. If you start saving when you’re 30 years old, for example, you’ll need to set aside 18% of your income. If you start saving at 35, you’ll need to save 23%.


The 10 Times Method says that in order to have enough for a comfortable retirement, you should aim to have saved ten times your annual salary at age 65.

To help you stay on track, you should aim to have saved your annual salary by age 30, three times your annual salary by age 40, six times by age 50, and eight times by age 60.

If you want to enjoy the golden years of your retirement without any financial worries, you really shouldn’t put off planning your retirement.

Here are a few reasons why.

Over the 20th century, life expectancy has increased dramatically. While it’s definitely good news that we’re living longer, we need more savings to actually enjoy those extra years. Calculating our retirement has become even more urgent in the last few decades because as things stand now, the labour force (people aged 20-64) can no longer support the growing number of retirees.

Research on retirement has shown that if you want to maintain the lifestyle you’re accustomed to when you retire, your pension income should be at least equal to 70-80% of your last salary. In order to make sure you don’t fall into the pension gap, keeping this percentage in mind is key.

According to the World Bank, you can reach your pension goals if you use the "three pillar" system. This is how it works. The first pillar is your government pension (what you get from your Social Insurance Fund in Cyprus). The second pillar is your occupational pension, occasionally provided by employers. The third pillar is your private retirement saving plans and investments.

In Cyprus, your state pension is expected to cover about 40% of your last salary, though coverage is actually lower for higher pre-retirement salaries. This means that, if you want to live comfortably and avoid the pension gap, you’ll definitely need to supplement your pension income with income from the second and third pillars.

Life policy providers, like Ancoria, specialise in helping people get on track for a comfortable retirement. If you have any questions about your retirement needs or goals, contact one of our investment specialists today.

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